App Development: 'Off-The-Shelf' vs. Custom Software

by David Burkett, Jun 22, 2017

The question of build vs. buy puzzles many C-level managers, who find themselves unable to confidently evaluate the pros and cons of each of their options: build custom business software or buy "off-the-shelf". This question is all the more challenging for startups, which are normally more resource limited than established organisations. However, because the answer to this question is critical, it cannot be rushed, nor can it be procrastinated. The choice is yours: build and bear the cost of developing an app or buy and bear the cost of not developing an app.

When to buy Off the Shelf

Normally, buying your application "off-the-shelf" is quicker and cheaper than hiring a professional services company and building your own bespoke app. This is especially advantageous when you're facing time or financial constraints. The speed and price of buying (vs. building) your app is even more appealing when there is already a product on the market that suits your business' needs.

There are plenty of pre-established apps on the market that have use within a business. More notable examples include Mailchimp, Xero and Hubspot. Each off the shelf solution serves a specific purpose. They generally operate in areas where there is consistency across businesses. For example, payroll is something that can be standardised (and in fact was standardised before a cloud based solution - i.e Myob).

Where an off the shelf solution does not fit is finding a system that matches your core internal process.

When to consider custom software

Although buying your app "off-the-shelf" is (normally) initially quicker and cheaper than building your own, these advantages can be outweighed. As mentioned above, finding existing apps that can compliment your business operations is recommended. However, every successful business has found their unique value proposition. Often, existing software cannot compliment this unique value proposition (as you would expect given that it is unique). The trap many businesses fall into is changing their process to fit the constraints and limitations of the COTS solution. Imagine KFC changing their recipe because two of the secret herbs and spices weren't in stock.

There are specific circumstances where custom software should be preferred.

Licensing software to your customers

If you're looking for a solution that will be client facing and ultimately assist with bringing in revenue to the business then custom software is likely the better fit. As you own the IP of your own software, there is the opportunity to license it out. This could act as a secondary stream of revenue. If you or your clients need to pay a licensing fee for an off the shelf solution then be sure to consider that fee in your calculations when deciding between COTS or custom. There are many stories in the market of companies that decided to use COTS (as it was initially cheaper) only to experience significant growth and lose hundreds of thousands of dollars annually in possible licensing revenue.

Integrating with other platforms

If you require an integration with another (or multiple) off the shelf products it is generally a red flag to consider custom software development. Because you are using another's code, you are unable to make changes to suit your own changing needs. Instead, you have to wait until the source code's owner updates the core code, and there's no guarantee that they will. If you have a significant degree of influence over the off the shelf provider then they may be willing to update the application to meet your requirements. But it is worth noting that this is rare and generally not done in a time sensitive manner.

Limitations of Off the Shelf

Your business' inability to change the core code that's critical to your operations limits its ability to pivot and scale. This can have a direct impact on your bottom line and growth. The net result being: the cheapest option may not be the most cost-effective one in the long run.

2.not being able to integrate with other, essential programs in your business' toolkit.

There can be an opportunity cost to buying part or all of your software stack. When you use the same desktop programs, web and mobile apps, APIs or plugins as your competitors, you miss an opportunity to gain a competitive advantage. An advantage that can grow over time, as you invest in your proprietary technology.

When you hire a bespoke software development company, the web and mobile app development costs can be daunting, but there's real value in owning your own source code.

Ultimately, neither option is always better than the other. The individual circumstances of your business and the sub-options within buying or building your application(s) will determine what the appropriate choice is.

For example, some app development companies, including WorkingMouse, employ an adaptive process for building apps that allow rapid deployment across multiple platforms, including web, Android and iOS. This can reduce the time and cost required to release a custom-made app, and as a result disrupt the normal balance of pros and cons in the build vs. buy dilemma. In the same vein, a competitively priced, "off-the-shelf" app may have all the capabilities your business needs.

To build or to buy. The answer to this question is vital. Your choice will have major time and cost repercussions that impact the future stability and profitability of your company for years to come. Choose well.